Crypto Weekly Roundup: Don Those Lazer Eyes People!
June 11, 2021
While this week may not have been epic price action-wise, it has been genuinely historic when it comes to mainstream adoption. Firstly, El Salvador successfully passed a bill that officially made Bitcoin legal tender. El Salvadorans can now use BTC in any transaction, and most businesses will have to accept BTC payments.
Nayib Bukele, the president of El Salvador, has become the latest darling of crypto Twitter. He has shared some incredible updates throughout the week, including El Salvador harnessing renewable energy from their volcanoes to mine Bitcoin.
I will repeat that.
Volcano. Bitcoin. Mining.
That sounds like the kind of mining Chuck Norris would be proud of!
Anyway, taking Bukele’s lead, prominent politicians in South and Central America have donned lazer eyes in their DPs, showing their support to BTC.
Alright, now why is this such a huge deal?
Latin American countries have historically faced severe hyperinflation and corruption for the last several decades in the hands of their central bankers and politicians (most of whom are unelected).
Bitcoin helps revolutionize this by creating a payment system that doesn’t depend on intermediaries. Also, due to the transparent nature of the blockchain, it could potentially add another level of accountability to government spending.
Michael Saylor, the MicroStrategy CEO, said:
“For centuries, every political policy and banking initiative championed by North America and Western Europe to aid Latin American economies has been a failure. The solution requires monetary technology, not conventional political/economic thinking & good intentions.”
China’s Sentiment Is The Exact Opposite
While Latin America is full bullish, China is the exact opposite. This past week, two different former senior bank officials have come out in opposition to cryptocurrencies. Wang Yongli, the former deputy governor of the Bank of China, has criticized El Salvador for this historic move., According to him, “small countries” like El Salvador are making a move to crypto to get rid of the US dollar’s control over their market.
“El Salvador and other countries that lack sovereign currencies lack the most basic understanding of currency. Using Bitcoin as legal tender can only seek a dead end.”
Yongli believes that illusions and not facts primarily fuel the move. Along with him, the former Governor of the People’s Bank of China (PBOC), Zhou Xiaochuan, said that cryptos might have already missed the opportunity to be considered a legit payment mode.
Bitcoin On-Chain Analysis
Of course, with all the activities going on in social media, the social volume metric has been absolutely bonkers. The number of peaks in the chart could put the Himalayas to shame!
Up next, let’s look at one of the most crucial metrics, the Spent Output Profit Ratio (SOPR). As you can see, the chart is currently above 1 after being below 1for most of the week. This tells us that the majority of the addresses are currently in profit.
Finally, let’s close off with the Velocity metric. Many analysts tend to ignore this metric, but I quite like it since it gives us an insight into investor behavior. The velocity was extremely high for most of the week, which is a negative signal since it indicates that the investors were busy moving their coins and not necessarily holding on to them. However, as you can see, towards the end, the trust towards BTC grew as velocity plummeted quite dramatically.
In Closing
General FUD from China is never going to go away. In fact, I talked about this exact topic last week. However, what we should do this week is to celebrate what El Salvador has done with Bitcoin and the financial revolution that they have seemingly ignited. I am personally very excited to see how many more countries follow suit over the next few weeks.
Oh, and before I go, do you like Bitcoin? Do you like free Bitcoin? I sure do.
Why don’t you take our GetSmart Quizzes? Successfully answer the questions and win some SATs (satoshis)? After that, spread the love and send the quizzes to your friends and family. Let’s all earn some free SATs!
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